Since we've determine that this portion of the original rule was probably taken from an AHRMA rulebook, a similar method of measuring rear travel may have also been copied. Here is AHRMA's method:
The field check for rear wheel travel, where applicable, is as follows: 1) Both shocks are removed from the bike, then one bare (without spring) damper unit is reinstalled. 2) The machine is supported in such a fashion that the rear suspension is at maximum extension, and a measurement is taken from the center of the rear axle to a point marked directly above the axle on the rear fender or subframe. 3) With both wheels on the ground, the rear suspension is fully compressed by the examiner with the rider aboard to compress any rubber bumpers; a measurement is again taken from the center of the rear axle to the same marked point above. 4) The measurement obtained in step 3 subtracted from the measurement in step 2 is the wheel travel.
I'm setting up an AHRMA Historic bike for the 2012 season and I'm going through the process of getting the forks to the 9 inch limit and putting a spacer in the rear shock. It is a '77 bike and came from the factory with more than 9 inches of travel on both ends. I'm taking it as a challenge to see just what it takes to be in compliance. I raced an RM125B for two seasons with stock forks and Works Performance shocks, that were the stock length and never thought I could have been protested, but maybe I just got lucky. Rules are rules, but I don't think 20-25mm of travel would be what beat someone you on the track. Quality of travel is a bigger deal. I would take the latest Ohlins piggybacks with 8.5 inches of travel over rebuilt shocks from the era with 10 inches.
Restoring and racing these great old machines is much more fun than arguing over 25mm or dealing with jerky comments. I'm going to be 51 yo soon. My father past away when he was 52. That fact and the posts here about Magoo make me realize how trivial some of this stuff is. Get your bikes into compliance and then together figure out how to change a bad rule.
Life is short, have fun!